76R14190 AJA-D By Reyna of Bexar, Van de Putte, Siebert, H.B. No. 3135 McClendon Substitute the following for H.B. No. 3135: By Wolens C.S.H.B. No. 3135 A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to state and local funding and agreements supporting the 1-3 bids of certain municipalities to host the 2007 Pan American Games; 1-4 providing a penalty. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. DEFINITIONS. In this Act: 1-7 (1) "Department" means the Texas Department of 1-8 Economic Development. 1-9 (2) "Endorsing municipality" means a municipality that 1-10 has a population of 850,000 or more according to the most recent 1-11 federal decennial census and that authorizes a bid by a local 1-12 organizing committee for selection of the municipality as the site 1-13 of the 2007 Pan American Games. 1-14 (3) "Games" means the 2007 Pan American Games. 1-15 (4) "Games support contract" means a joinder 1-16 undertaking, a joinder agreement, or a similar contract executed by 1-17 the department and containing terms permitted or required by this 1-18 Act. 1-19 (5) "Joinder agreement" means an agreement entered 1-20 into by: 1-21 (A) the department on behalf of this state and a 1-22 site selection organization setting out representations and 1-23 assurances by the state in connection with the selection of a site 1-24 in this state for the location of the games; or 2-1 (B) an endorsing municipality and a site 2-2 selection organization setting out representations and assurances 2-3 by the endorsing municipality in connection with the selection of a 2-4 site in this state for the location of the games. 2-5 (6) "Joinder undertaking" means an agreement entered 2-6 into by: 2-7 (A) the department on behalf of this state and a 2-8 site selection organization that the state will execute a joinder 2-9 agreement in the event that the site selection organization selects 2-10 a site in this state for the games; or 2-11 (B) an endorsing municipality and a site 2-12 selection organization that the municipality will execute a joinder 2-13 agreement in the event that the site selection organization selects 2-14 a site in this state for the games. 2-15 (7) "Local organizing committee" means a nonprofit 2-16 corporation or its successor in interest that: 2-17 (A) has been authorized by an endorsing 2-18 municipality to pursue an application and bid on the applicant's 2-19 behalf to the Pan American Sports Organization for selection as the 2-20 site of the games; or 2-21 (B) has executed an agreement with a site 2-22 selection organization regarding a bid to host the games. 2-23 (8) "Site selection organization" means the United 2-24 States Olympic Committee or the Pan American Sports Organization. 2-25 SECTION 2. PURPOSE. The purpose of this Act is to provide 2-26 assurances required by the site selection organization sponsoring 2-27 the games. 3-1 SECTION 3. LEGISLATIVE FINDINGS. The conduct in this state 3-2 of the 2007 Pan American Games will: 3-3 (1) provide invaluable public visibility throughout 3-4 the world for this state and the communities where the games are 3-5 held; 3-6 (2) encourage and provide major economic benefits to 3-7 the communities where the games are held and to the entire state; 3-8 and 3-9 (3) provide job creation opportunities for local and 3-10 Texas businesses. 3-11 SECTION 4. GUARANTEE OF STATE AND MUNICIPAL OBLIGATIONS; PAN 3-12 AMERICAN GAMES TRUST FUND. (a) If a site selection organization 3-13 selects a site for the games in this state pursuant to an 3-14 application by a local organizing committee, after the first 3-15 occurrence of a measurable economic impact in this state as a 3-16 result of the preparation for the games, as determined by the 3-17 comptroller, but in no event later than one year before the 3-18 scheduled opening event of the games, the comptroller shall 3-19 determine for each subsequent calendar quarter, in accordance with 3-20 procedures developed by the comptroller: 3-21 (1) the incremental increase in the receipts to the 3-22 state from the taxes imposed under Chapters 151, 152, 156, and 183, 3-23 Tax Code, and under Title 5, Alcoholic Beverage Code, within the 3-24 market areas designated under Subsection (b) of this section, that 3-25 is directly attributable, as determined by the comptroller, to the 3-26 preparation for and presentation of the games and related events; 3-27 and 4-1 (2) the incremental increase in the receipts collected 4-2 by the state on behalf of the endorsing municipality from the sales 4-3 and use tax imposed by the endorsing municipality under Section 4-4 321.101(a), Tax Code, that is directly attributable, as determined 4-5 by the comptroller, to the preparation for and presentation of the 4-6 games and related events. 4-7 (b) For the purposes of Subsection (a)(1) of this section, 4-8 the comptroller shall designate as a market area for the games each 4-9 area in which the comptroller determines there is a reasonable 4-10 likelihood of measurable economic impact directly attributable to 4-11 the preparation for and presentation of the games and related 4-12 events, including areas likely to provide venues, accommodations, 4-13 and services in connection with the games based on the proposal 4-14 provided by the local organizing committee under Section 6 of this 4-15 Act. The comptroller shall determine the geographic boundaries of 4-16 each market area. The endorsing municipality that has been selected 4-17 as the site for the games must be included in a market area for the 4-18 games. 4-19 (c) Subject to Section 5 of this Act, the comptroller shall 4-20 retain, for the purpose of guaranteeing the joint obligations of 4-21 the state and the endorsing municipality under a games support 4-22 contract and this Act, the amount of municipal sales and use tax 4-23 revenue determined under Subsection (a)(2) of this section from the 4-24 amounts otherwise required to be sent to the municipality under 4-25 Section 321.502, Tax Code, beginning with the first distribution of 4-26 that tax revenue that occurs after the date the comptroller makes 4-27 the determination of the amount of municipal sales and use tax 5-1 revenue under Subsection (a)(2). The comptroller shall discontinue 5-2 retaining municipal sales and use tax revenue under this subsection 5-3 on the earlier of: 5-4 (1) the end of the third calendar month following the 5-5 month in which the closing event of the games occurs; or 5-6 (2) the date that the amount of municipal sales and 5-7 use tax revenue in the Pan American Games trust fund equals 14 5-8 percent of the maximum amount that may be deposited in the trust 5-9 fund under Subsection (m) of this section. 5-10 (d) In addition to municipal sales and use tax revenue 5-11 retained under Subsection (c) of this section, an endorsing 5-12 municipality may guarantee its obligations under a games support 5-13 contract and this Act by pledging surcharges from user fees, 5-14 including parking or ticket fees, charged in connection with 5-15 presentation of the games. 5-16 (e) The comptroller shall deposit the amount of state tax 5-17 revenue determined under Subsection (a)(1) of this section and the 5-18 amount of municipal sales and use tax revenue retained under 5-19 Subsection (c) of this section into a trust fund designated as the 5-20 Pan American Games trust fund. The trust fund is established 5-21 outside the treasury but is held in trust by the comptroller for 5-22 the administration of this Act. Money in the trust fund may be 5-23 spent by the department without appropriation only as provided by 5-24 this Act. The comptroller shall discontinue deposit of the amount 5-25 of state tax revenue determined under Subsection (a)(1) of this 5-26 section on the earlier of: 5-27 (1) the end of the third calendar month following the 6-1 month in which the closing event of the games occurs; or 6-2 (2) the date the amount of state revenue in the Pan 6-3 American Games trust fund equals 86 percent of the maximum amount 6-4 that may be deposited in the trust fund under Subsection (m) of 6-5 this section. 6-6 (f) The endorsing municipality may deposit into the Pan 6-7 American Games trust fund any amount of available revenue from the 6-8 municipality's hotel occupancy tax imposed under Chapter 351, Tax 6-9 Code. Deposit of that revenue into the trust fund is considered an 6-10 authorized use of the revenue for purposes of Chapter 351, Tax 6-11 Code. The comptroller shall credit any amount of municipal hotel 6-12 occupancy tax revenue deposited by the endorsing municipality into 6-13 the trust fund toward the amounts otherwise required to be retained 6-14 under Subsection (c) of this section from the municipality's sales 6-15 and use tax revenue and shall reduce the amount of the 6-16 municipality's sales and use tax revenue retained under Subsection 6-17 (c) from the next distribution of that revenue to the municipality 6-18 under Section 321.502, Tax Code. 6-19 (g) The department may use the funds in the Pan American 6-20 Games trust fund only to fulfill joint obligations of the state and 6-21 the endorsing municipality to a site selection organization under a 6-22 games support contract or any other agreement providing assurances 6-23 from the department or the endorsing municipality to a site 6-24 selection organization. 6-25 (h) A local organizing committee shall provide information 6-26 required by the comptroller to enable the comptroller to fulfill 6-27 the comptroller's duties under this Act, including annual audited 7-1 statements of the local organizing committee's financial records 7-2 required by a site selection organization and data obtained by the 7-3 local organizing committee relating to attendance at the games and 7-4 to the economic impact of the games. A local organizing committee 7-5 must provide an annual audited financial statement required by the 7-6 comptroller not later than the end of the fourth month after the 7-7 date the period covered by the financial statement ends. 7-8 (i) The comptroller shall provide an estimate before August 7-9 31, 1999, of the total amount that would be deposited in the Pan 7-10 American Games trust fund before January 1, 2008, if the games were 7-11 to be held in this state at a site selected pursuant to an 7-12 application by a local organizing committee. The comptroller shall 7-13 provide the estimate on request to a local organizing committee. A 7-14 local organizing committee may submit the comptroller's estimate to 7-15 a site selection organization. 7-16 (j) The department may not make a disbursement from the Pan 7-17 American Games trust fund unless the comptroller certifies that the 7-18 disbursement is for a purpose for which the state and the endorsing 7-19 municipality are jointly obligated under a games support contract 7-20 or other agreement described by Subsection (g) of this section. 7-21 (k) If the comptroller certifies under Subsection (j) of 7-22 this section that a disbursement may be made from the Pan American 7-23 Games trust fund, the obligation shall be satisfied first out of 7-24 municipal revenue deposited in the trust fund. If the municipal 7-25 revenue is not sufficient to satisfy the entire deficit, state 7-26 revenue deposited into the trust fund shall be used to satisfy the 7-27 portion of the deficit not covered by the municipal revenue. 8-1 (l) On January 1, 2009, the comptroller shall transfer to 8-2 the general revenue fund any money remaining in the Pan American 8-3 Games trust fund, not to exceed the amount of state revenue 8-4 remaining in the trust fund, plus any interest earned on that state 8-5 revenue. The comptroller shall remit to the endorsing municipality 8-6 any money remaining in the trust fund after the required amount is 8-7 transferred to the general revenue fund. 8-8 (m) In no event may: 8-9 (1) the amount deposited in the Pan American Games 8-10 trust fund exceed $20 million; or 8-11 (2) the joint liability of the state and the endorsing 8-12 municipality under a joinder agreement and any other games support 8-13 contracts entered into pursuant to this Act exceed $20 million. 8-14 SECTION 5. MUNICIPAL ELECTION. (a) Except as provided by 8-15 Subsection (b) of this section, an endorsing municipality must hold 8-16 an election in the municipality to determine whether the 8-17 municipality may contribute a portion of its sales and use taxes to 8-18 the Pan American Games trust fund under Section 4 of this Act. The 8-19 election must be held on a uniform election date that occurs after 8-20 the effective date of this Act and before the date a site selection 8-21 organization requires the endorsing municipality and the state to 8-22 enter into a joinder undertaking. 8-23 (b) An endorsing municipality is not required to hold an 8-24 election under this section if there is not a sufficient number of 8-25 days between the effective date of this Act and a uniform election 8-26 date that occurs before the date a site selection organization 8-27 requires that the endorsing municipality and the state enter into a 9-1 joinder undertaking to allow the municipality to submit the 9-2 proposed election to the United States attorney general for 9-3 preclearance under Section 5 of the Voting Rights Act of 1965, as 9-4 amended (42 U.S.C. Section 1973c), at least 120 days before the 9-5 election. 9-6 (c) If an endorsing municipality is required to hold an 9-7 election under this section, the comptroller may not retain 9-8 municipal sales and use tax revenue under Section 4(c) of this Act 9-9 from amounts otherwise required to be sent to that municipality 9-10 under Section 321.502, Tax Code, unless the contribution of a 9-11 portion of the municipality's sales and use taxes is approved by a 9-12 majority of the voters voting in the election. 9-13 SECTION 6. ASSISTANCE OF DEPARTMENT AND OTHER STATE 9-14 AGENCIES. (a) The department shall review requests from a local 9-15 organizing committee that the department, on behalf of the state, 9-16 enter into a games support contract that is required by a site 9-17 selection organization in connection with the committee's bid to 9-18 host the games. 9-19 (b) A request made under Subsection (a) of this section must 9-20 be accompanied by: 9-21 (1) a general description and summary of the games for 9-22 which a site selection is sought by the local organizing committee; 9-23 (2) a preliminary and general description of the 9-24 proposal the local organizing committee intends to submit to a site 9-25 selection organization; 9-26 (3) the estimated cost of preparing and submitting the 9-27 intended proposal; 10-1 (4) the local organizing committee's intended method 10-2 of obtaining the funds needed for the purpose of preparing the 10-3 proposal; 10-4 (5) a description by type and approximate amount of 10-5 the site selection application costs that the local organizing 10-6 committee intends to spend; and 10-7 (6) any other information reasonably requested by the 10-8 department to assist it in reviewing the request. 10-9 (c) The department shall approve or deny a request made 10-10 under Subsection (a) of this section not later than the 30th day 10-11 after the date the request is submitted. 10-12 (d) The department may agree in a joinder undertaking 10-13 entered into with a site selection organization that the department 10-14 will: 10-15 (1) execute a joinder agreement if the site selection 10-16 organization selects a site in this state for the games; and 10-17 (2) refrain from taking any action after the execution 10-18 of the joinder undertaking that would impair its ability to execute 10-19 the joinder agreement. 10-20 (e) The department may agree in a joinder undertaking that 10-21 the state will: 10-22 (1) provide or cause to be provided all of the 10-23 governmental funding, facilities, and other resources specified in 10-24 the local organizing committee's bid to host the games; 10-25 (2) be bound by the terms of, cause the local 10-26 organizing committee to perform, and guarantee performance of the 10-27 local organizing committee's obligations under contracts relating 11-1 to selecting a site in this state for the games; and 11-2 (3) be jointly liable with the local organizing 11-3 committee for: 11-4 (A) obligations of the local organizing 11-5 committee to a site selection organization, including obligations 11-6 indemnifying the site selection organization against claims of and 11-7 liabilities to third parties arising out of or relating to the 11-8 games; and 11-9 (B) any financial deficit relating to the games. 11-10 (f) The department may agree to execute a joinder 11-11 undertaking, a joinder agreement, or other games support contract 11-12 only if: 11-13 (1) the department determines that: 11-14 (A) the state's assurances and obligations under 11-15 the undertaking, agreement, or contract are reasonable; and 11-16 (B) any financial commitments of the state will 11-17 be satisfied exclusively by recourse to the Pan American Games 11-18 trust fund; and 11-19 (2) the endorsing municipality has executed an 11-20 agreement with a site selection organization that contains 11-21 substantially similar terms. 11-22 (g) Before executing a games support contract, the 11-23 department must execute an agreement with the applicable local 11-24 organizing committee requiring that if a site selection 11-25 organization selects a site for the games in this state pursuant to 11-26 an application by the local organizing committee, the local 11-27 organizing committee will repay the state any funds expended by the 12-1 department under this Act from any surplus of the local organizing 12-2 committee's funds remaining after the presentation of the games and 12-3 after the payment of the expenses and obligations incurred by the 12-4 local organizing committee. 12-5 (h) A games support contract may contain any additional 12-6 provisions the department requires in order to carry out the 12-7 purposes of this Act. 12-8 (i) The department may require a local organizing committee 12-9 to list the state as an additional insured on any policy of 12-10 insurance purchased by the local organizing committee and required 12-11 by a site selection organization to be in effect in connection with 12-12 the games. 12-13 (j) The Texas Department of Transportation, the Texas 12-14 Department of Public Safety, and the Texas Department of Housing 12-15 and Community Affairs may: 12-16 (1) assist a local organizing committee in developing 12-17 applications and planning for the games; and 12-18 (2) enter into contracts, agreements, or assurances 12-19 related to the presentation of the games. 12-20 (k) Notwithstanding any other provision of this Act, the 12-21 department may not obligate the state to pay or otherwise provide 12-22 funds to cover the costs of the construction or purchase of a 12-23 building or other facility by a municipality. 12-24 SECTION 7. APPLICATION OF OPEN MEETINGS AND OPEN RECORDS 12-25 LAWS. (a) A local organizing committee and its governing body are 12-26 subject to Chapters 551 and 552, Government Code. 12-27 (b) A final bid that is submitted by a local organizing 13-1 committee to a site selection organization is excepted from 13-2 required public disclosure under Chapter 552, Government Code, 13-3 until the Pan American Sports Organization selects the site for the 13-4 games. 13-5 SECTION 8. TAX EXEMPTIONS FOR LOCAL ORGANIZING COMMITTEE. 13-6 (a) A local organizing committee is exempt from: 13-7 (1) the sales, excise, and use taxes imposed under 13-8 Chapter 151, Tax Code; 13-9 (2) taxes on the sale, rental, or use of a motor 13-10 vehicle imposed under Chapter 152, Tax Code; 13-11 (3) the hotel occupancy tax imposed under Chapter 156, 13-12 Tax Code; and 13-13 (4) the franchise tax imposed under Chapter 171, Tax 13-14 Code. 13-15 (b) The exemptions provided by Subsections (a)(1), (2), and 13-16 (3) of this section take effect on the first day of the first month 13-17 after the effective date of this Act. The exemption provided by 13-18 Subsection (a)(4) of this section applies only to a tax imposed 13-19 under Chapter 171, Tax Code, that becomes due on or after the 13-20 effective date of this Act. 13-21 SECTION 9. ETHICS. (a) A local organizing committee that 13-22 submits a request under Section 6(a) of this Act must: 13-23 (1) affirm as a part of that request that it is fully 13-24 in compliance with the ethical guidelines set forth in all 13-25 contracts entered into and rules adopted by a site selection 13-26 organization, including the site selection organization's 13-27 requirements regarding disclosure of any financial interest by a 14-1 director, officer, or senior-level employee of the local organizing 14-2 committee in any proposed transaction with the local organizing 14-3 committee; 14-4 (2) not later than the 15th day of the first month 14-5 following each calendar quarter, file with the secretary of the 14-6 endorsing municipality for which the local organizing committee 14-7 submits a request: 14-8 (A) a certification that the local organizing 14-9 committee continues to be in compliance with the ethical guidelines 14-10 described by Subdivision (1) of this subsection; and 14-11 (B) a report of contributions to and 14-12 expenditures by the local organizing committee in the manner 14-13 described by Subsection (b) of this section; and 14-14 (3) file with the secretary of the endorsing 14-15 municipality on April 15 of each year a copy of each financial 14-16 statement required to be submitted by a local organizing committee 14-17 or a member of a local organizing committee to the United States 14-18 Olympic Committee during the preceding calendar year. 14-19 (b) A report made under Subsection (a)(2)(B) of this section 14-20 must include: 14-21 (1) for each contribution made to a local organizing 14-22 committee: 14-23 (A) the contributor's full name and address; 14-24 (B) the date of the contribution; 14-25 (C) whether the contribution is cash, made by 14-26 check, or in-kind; and 14-27 (D) the amount or market value of the 15-1 contribution; and 15-2 (2) for each expenditure made by a local organizing 15-3 committee: 15-4 (A) the full name and address of the person who 15-5 receives payment of the expenditure; 15-6 (B) the date of the expenditure; 15-7 (C) the purpose of the expenditure; and 15-8 (D) the amount of the expenditure. 15-9 (c) The endorsing municipality for which a local organizing 15-10 committee submits a request under Section 6(a) of this Act must 15-11 have a comprehensive ethics code establishing standards of conduct, 15-12 disclosure requirements, and enforcement mechanisms relating to 15-13 city officials and employees before the department may consider the 15-14 request. 15-15 SECTION 10. BRIBERY. (a) A person commits an offense if 15-16 the person intentionally or knowingly offers, confers, or agrees to 15-17 confer on another person, or solicits, accepts, or agrees to accept 15-18 from another person, any benefit as consideration for the 15-19 recipient's decision, opinion, recommendation, vote, or other 15-20 exercise of discretion as a member or employee of a local 15-21 organizing committee or site selection organization. 15-22 (b) It is a defense to prosecution under Subsection (a) of 15-23 this section that the benefit conferred is a meal or entertainment 15-24 reported under Section 9(a)(2)(B) of this Act or under a disclosure 15-25 requirement described by Section 9(a)(1) or 9(c) of this Act. 15-26 (c) It is not a defense to prosecution under Subsection (a) 15-27 of this section that a person whom the actor sought to influence 16-1 was not qualified to act as the actor intended the person to act. 16-2 (d) It is not a defense to prosecution under Subsection (a) 16-3 of this section that the benefit is not offered or conferred or 16-4 that the benefit is not solicited or accepted until after: 16-5 (1) the decision, opinion, recommendation, vote, or 16-6 other exercise of discretion has occurred; or 16-7 (2) the person whom the actor sought to influence is 16-8 no longer a member of the local organizing committee or a site 16-9 selection organization. 16-10 (e) In this section, "benefit" has the meaning assigned by 16-11 Section 36.01, Penal Code. 16-12 (f) An offense under this section is a felony of the second 16-13 degree. 16-14 SECTION 11. EMERGENCY. The importance of this legislation 16-15 and the crowded condition of the calendars in both houses create an 16-16 emergency and an imperative public necessity that the 16-17 constitutional rule requiring bills to be read on three several 16-18 days in each house be suspended, and this rule is hereby suspended.